Fitch Ratings’ chief economist Brian Coulton forecasts a potential economic strain due to tariffs and inflation, highlighting global trade challenges and possible repercussions by 2026.
The analysis underscores significant implications for global economies, with tariffs potentially hampering growth and increasing costs, affecting both consumer prices and broader financial markets.
US and China Economy Could Decline by 1%
Fitch Ratings’ economic analysis suggests growing tariff pressures could severely impact global markets. Brian Coulton, a key economist, emphasizes the possible decline in growth by 1 percentage point in major economies like the US and China. As Coulton notes,
The global trade war will reduce GDP by about 1 percentage point in the US, China, and Europe by 2026.
With ongoing trade tensions, global economies face challenges in maintaining growth. Coupled with inflation concerns, businesses may witness rising costs and decreased consumer spending, impacting economic stability and market confidence.
IMF Lowers Growth Forecasts Amid Tariff Concerns
The economic community has reacted with concern to Fitch’s analysis, citing potential negative effects on global trade. The International Monetary Fund has similarly issued warnings, adjusting growth forecasts for major economies downward.
Increased tariffs could lead to higher inflation, reducing real wages and squeezing consumer purchasing power. Historical data suggest that prolonged tariff impacts might strain businesses, leading to market volatility and possible currency fluctuations.
2018 US-China Tariffs Show Market Disruptions
Past trade wars, such as the 2018 US-China tensions, have demonstrated the disruptive power of tariffs on global economies. These events frequently lead to commodity price swings and affect international trade dynamics significantly.
Experts from Kanalcoin stress the importance of addressing tariff-induced economic shifts. Historical trends reveal that unmitigated tariff issues can lead to sustained economic downturns, impacting both developed and emerging markets globally Deloitte’s insights.
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